Herron High School, Inc.

FINDING 2025-001 – EQUIPMENT AND REAL PROPERTY MANAGEMENT Significant Deficiency Federal Programs: Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-002. Criteria 2 CFR 200.313(d) contains equipment management requirements which dictate property records entities must maintain and the need for procedures to adequately safeguard and maintain assets acquired with federal funding. Condition The Organization did not retain in their accounting records all the required information. Specifically, the federal award identification number, holder of the title, use, and condition were not listed. The federal participation was assumed based on allocations between fund codes in the general ledger. Additionally, sufficient and appropriate documentation did not exist to support a physical inventory had been completed for all assets once in the last two years. Cause and Effect Individuals responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. As a result, adequate documentation was not maintained for equipment acquired with federal funds or to support the performance of a physical inventory occurring within the required time period. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 37 to 38.

FINDING 2025-002 – MAINTENANCE OF EFFORT Significant Deficiency Federal Programs: Title I, Part A – Assistance Listing Number 84.010 Criteria 2 CFR part 200, Appendix XI, Compliance Supplement 2020, Section 4-84.000-13, states “An LEA may receive funds under an applicable program only if the SEA finds that the combined fiscal effort per student or the aggregate expenditures of the LEA from state and local funds for free public education for the preceding year was not less than 90 percent of the combined fiscal effort or aggregate expenditures for the second preceding year, unless specifically waved.” Condition The Indiana Department of Education completes the maintenance of effort calculation using the Form 9 report issued by the Organization, which is a cash-basis report. Review of the Organization’s Form 9 found the report to be unreliable for analysis of expenditures. The Form 9 reflected a total ending cash balance for all three schools of ($7,037,772), when the total cash balance held by the school at June 30, 2025 was $3,083,380. Cause and Effect The Organization did not report activity in line with the guidelines set by the Indiana Department of Education. Maintenance of effort calculations prepared by the Indiana Department of Education could be impacted by incorrect reporting of expense transactions. Recommendation We recommend the Organization develop internal controls to ensure expenses are properly reported on the Form 9 report in line with guidelines. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 37 to 38.

FINDING 2024-001 - RISK ASSESSMENT PROCESS RELATED TO COMPLIANCE REQUIREMENTS Material Weakness Federal Programs: Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-001. Criteria 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Organization must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal control in the Federal Government” issued by the Comptroller General of the Unites States of the “Internal control Integrated Framework:, issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO)”. Condition The Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. The Organization also implements the use of federal funds through different departments. Certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. Cause and Effect The material weakness resulted in the noncompliance findings described in items 2024-002 and 2024-003. Recommendation We recommend additional resources be allocated to federal award compliance to review federal award provisions and requirements, evaluate risks of noncompliance, and respond to such risks through internal controls. The process should include methods to identify and communicate changes to federal award requirements to all key individuals within the Organization and to verify internal controls are implemented correctly and are operating effectively. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 42 through 44.

FINDING 2024-002 – EQUIPMENT AND REAL PROPERTY MANAGEMENT Significant Deficiency Federal Programs: Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Criteria 2 CFR 200.313(d) contains equipment management requirements which dictate property records entities must maintain and the need for procedures to adequately safeguard and maintain assets acquired with federal funding. Condition The Organization did not retain in their accounting records all the required information. Specifically, the federal award identification number, holder of the title, use, and condition were not listed. The federal participation was assumed based on allocations between fund codes in the general ledger. Additionally, sufficient and appropriate documentation did not exist to support a physical inventory had been completed for all assets once in the last two years. Cause and Effect As described in 2024-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. As a result, adequate documentation was not maintained for equipment acquired with federal funds or to support the performance of a physical inventory occurring within the required time period. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 42 through 44.

FINDING 2023-003 – PROCUREMENT AND SUSPENSION AND DEBARMENT (Repeat Finding of 2022-003) Significant Deficiency FFINDING 2024-003 – PROCUREMENT AND SUSPENSION AND DEBARMENT Significant Deficiency Federal Programs: Charter Schools – Assistance Listing Number 84.282 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Criteria 2 CFR 200.318(i) establishes the need to maintain records sufficient to detail the history of procurement. 2 CFR 180.300 establishes the responsibilities of participants entering into covered transactions. Condition The Organization lacked sufficient documentation to support the rationale of procurement methods, selection of contract types, contractor selection or rejection, and basis for the contract price. We also noted suspension and debarments requirements were not given consideration prior to entering into these transactions. However, we noted there were adequate invoices to support the purchases. Cause and Effect As described in 2024-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals, within a department, responsible for the use of federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds. As a result, they did not comply with requirements for proper procurement or in relation to suspension and debarment. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to sufficiently document procurements and to ensure suspension and debarment is considered prior to entering into future covered transactions. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 42 through 44.

FINDING 2024-004 – PAYROLL ALLOCATION SUPPORT Significant Deficiency Federal Programs: Education Stabilization Fund – Assistance Listing Number 84.425 Criteria Charges for Federal awards for salaries and wages must be based on records that accurately reflect work performed (2 CFR 200.430(i)). Condition The Organization applied employee salary expenses to the program. While employees were applied to the grant in line with the approved budget in total, documentation was not maintained to support how amounts applied each pay period were determined. Cause and Effect In the transition of accounting staff, this information was not maintained. The Organization is unable to document how amounts were determined and applied to the grant. Recommendation We recommend the Organization develop internal controls to ensure proper documentation to support the allocation of payroll is maintained. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 42 through 44.

FINDING 2023-001 - RISK ASSESSMENT PROCESS RELATED TO COMPLIANCE REQUIREMENTS (Repeat Finding of 2022-001) Material Weakness Federal Programs: Charter Schools – Assistance Listing Number 84.282; Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Criteria 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Organization must, among other things, “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal control in the Federal Government” issued by the Comptroller General of the Unites States of the “Internal control Integrated Framework:, issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO)”. Condition The Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. The Organization also implements the use of federal funds through different departments. Certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. Cause and Effect The material weakness resulted in the noncompliance findings described in items 2023-002 and 2023-003. Recommendation We recommend additional resources be allocated to federal award compliance to review federal award provisions and requirements, evaluate risks of noncompliance, and respond to such risks through internal controls. The process should include methods to identify and communicate changes to federal award requirements to all key individuals within the Organization and to verify internal controls are implemented correctly and are operating effectively. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 43 and 44.

FINDING 2023-002 – EQUIPMENT AND REAL PROPERTY MANAGEMENT (Repeat Finding of 2022-002) Significant Deficiency Federal Programs: Charter Schools – Assistance Listing Number 84.282; Education Stabilization Fund – Assistance Listing Number 84.425 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-002. Criteria 2 CFR 200.313(d) contains equipment management requirements which dictate property records entities must maintain and the need for procedures to adequately safeguard and maintain assets acquired with federal funding. Condition The Organization did not retain in their accounting records all the required information. Specifically, the federal award identification number, holder of the title, use, and condition were not listed. The federal participation was assumed based on allocations between fund codes in the general ledger. Additionally, sufficient and appropriate documentation did not exist to support a physical inventory had been completed for all assets once in the last two years. Cause and Effect As described in 2023-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. As a result, adequate documentation was not maintained for equipment acquired with federal funds or to support the performance of a physical inventory occurring within the required time period. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 43 and 44.

FINDING 2023-003 – PROCUREMENT AND SUSPENSION AND DEBARMENT (Repeat Finding of 2022-003) Significant Deficiency Federal Programs: Charter Schools – AL 84.282 Repeat Finding: This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Criteria 2 CFR 200.318(i) establishes the need to maintain records sufficient to detail the history of procurement. 2 CFR 180.300 establishes the responsibilities of participants entering into covered transactions. Condition The Organization lacked sufficient documentation to support the rationale of procurement methods, selection of contract types, contractor selection or rejection, and basis for the contract price. We also noted suspension and debarments requirements were not given consideration prior to entering into these transactions. However, we noted there were adequate invoices to support the purchases. Cause and Effect As described in 2023-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals, within a department, responsible for the use of federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds. As a result, they did not comply with requirements for proper procurement or in relation to suspension and debarment. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to sufficiently document procurements and to ensure suspension and debarment is considered prior to entering into future covered transactions. Views of Responsible Officials and Planned Corrective Actions The Organization’s Corrective Action Plan is included on pages 43 and 44.

FINDING 2022-001 - RISK ASSESSMENT PROCESS RELATED TO COMPLIANCE REQUIREMENTS (Repeat Finding of 2021-001) Material Weakness Federal Programs: Charter Schools ? AL 84.282; Education Stabilization Fund ? AL 84.425 Criteria 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Organization must, among other things, ?establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal control in the Federal Government? issued by the Comptroller General of the Unites States of the ?Internal control Integrated Framework:, issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO)?. Condition The Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. The Organization also implements the use of federal funds through different departments. Certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. Cause and Effect The material weakness resulted in the noncompliance findings described in items 2022-002 and 2022-003. Recommendation We recommend additional resources be allocated to federal award compliance to review federal award provisions and requirements, evaluate risks of noncompliance, and respond to such risks through internal controls. The process should include methods to identify and communicate changes to federal award requirements to all key individuals within the Organization and to verify internal controls are implemented correctly and are operating effectively. Views of Responsible Officials and Planned Corrective Actions The Organization?s Corrective Action Plan is included on pages 38 and 39.

FINDING 2022-002 ? EQUIPMENT AND REAL PROPERTY MANAGEMENT (Repeat Finding of 2021-002) Significant Deficiency Federal Programs: Charter Schools ? AL 84.282; Education Stabilization Fund ? AL 84.425 Criteria 2 CFR 200.313(d) contains equipment management requirements which dictate property records entities must maintain and the need for procedures to adequately safeguard and maintain assets acquired with federal funding. Condition The Organization did not retain in their accounting records all the required information. Specifically, the federal award identification number, holder of the title, use, and condition were not listed. The federal participation was assumed based on allocations between fund codes in the general ledger. Additionally, sufficient and appropriate documentation did not exist to support a physical inventory had been completed for all assets once in the last two years. Cause and Effect As described in 2022-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. As a result, adequate documentation was not maintained for equipment acquired with federal funds or to support the performance of a physical inventory occurring within the required time period. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Views of Responsible Officials and Planned Corrective Actions The Organization?s Corrective Action Plan is included on pages 38 and 39.

FINDING 2022-003 ? PROCUREMENT AND SUSPENSION AND DEBARMENT (Repeat Finding of 2021-003) Significant Deficiency Federal Programs: Charter Schools ? AL 84.282 Criteria 2 CFR 200.318(i) establishes the need to maintain records sufficient to detail the history of procurement. 2 CFR 180.300 establishes the responsibilities of participants entering into covered transactions. Condition We noted the entity lacked sufficient documentation to support the rationale of procurement methods, selection of contract types, contractor selection or rejection, and basis for the contract price. We also noted suspension and debarments requirements were not given consideration prior to entering into these transactions. However, we noted there were adequate invoices to support the purchases. Cause and Effect As described in 2022-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals, within a department, responsible for the use of federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds. As a result, they did not comply with requirements for proper procurement or in relation to suspension and debarment. Recommendation We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to sufficiently document procurements and to ensure suspension and debarment is considered prior to entering into future covered transactions. Views of Responsible Officials and Planned Corrective Actions The Organization?s Corrective Action Plan is included on pages 38 and 39.

U.S. Department of Education 2021-001 Charter Schools ? AL #84.282 Education Stabilization Fund ? AL #84.425C, 84.425D & 84.425U Material Weakness in Internal Control over Compliance ? Risk Assessment Process Related to Compliance Requirements Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Organization must, among other things, ?establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)?. This is a repeat finding of 2020-001. Condition and Context: The Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. The Organization also implements the use of federal funds through different departments. Certain individuals, within a department, responsible for the use of federal funds or maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining to the use of the funds or the maintenance and safeguard of the acquired assets. Cause and Effect: The material weakness resulted in the noncompliance findings described below in items 2021-002 and 2021-003. Recommendation: We recommend additional resources be allocated to federal award compliance to review federal award provisions and requirements, evaluate risks of noncompliance, and respond to such risks through internal controls. The process should include methods to identify and communicate changes to federal award requirements to all key individuals within the Organization and to verify internal controls are implemented correctly and are operating effectively. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. As the organization has grown, compliance of federal programs has become decentralized. The Organization agrees that additional resources need to be added to ensure compliance with all state and federal awards. The Organization plans to add an additional staff person to the Business Office to centralize the compliance and reporting responsibilities. Management is in the process of developing the job description and identifying possible candidates for the position.

U.S. Department of Education 2021-002 Charter Schools ? AL #84.282 Education Stabilization Fund ? AL #84.425C, 84.425D & 84.425U Noncompliance ? Equipment and Real Property Management Criteria: 2 CFR 200.313(d) contains equipment management requirements which dictate property records entities must maintain and the need for procedures to adequately safeguard and maintain assets acquired with federal funding. Condition and Context: We selected 3 equipment acquisitions under AL #84.282 Charter Schools and 4 equipment acquisitions under AL #84.425C, 84.425D & 84.425U Education Stabilization Fund. Our sample was not a statistically valid sample. Of the items selected the following issues were noted: (a) The Organization did not retain in their accounting records all the required information. Specifically, the federal award identification number, holder of the title, use, and condition were noted listed. The federal participation was assumed based on allocations between fund codes in the general ledger. (b) Sufficient and appropriate documentation did not exist to support a physical inventory had been completed for all assets once in the last two years. Cause and Effect: As described in item 2021-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals within a department responsible for the maintenance and safeguard of assets acquired with federal funds lacked knowledge of the compliance requirements pertaining the maintenance and safeguard of the acquired assets. As a result, adequate documentation was not maintained for equipment acquired with federal funds or to support the performance of a physical inventory occurring within the required time period. Recommendation: We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to properly track equipment acquisitions in the accounting records and to ensure a physical inventory is appropriately documented when completed. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. The Organization has implemented a location software for student devices that tracks the majority of the required information for devices that are live on the network. The Organization concurs that additional internal controls are necessary to ensure all compliance requirements are met. These controls will include exports from the location software for a periodic inventory as well as additional procedures for tracking defective devices. Further controls will be implemented to ensure that the inventory records are easily traced to the invoices retained in the financial records. Similar controls will be implemented to ensure proper tracking and inventory of all assets purchased with federal funds. The additional position described above in 2021-001 will oversee the implementation of these controls and will conduct periodic internal audit to ensure adherence to all compliance requirements.

U.S. Department of Education 2021-003 Charter Schools ? AL #84.282 Noncompliance ? Procurement and Suspension and Debarment Criteria: 2 CFR 200.318(i) establishes the need to maintain records sufficient to detail the history of procurement. 2 CFR 180.300 establishes the responsibilities of participants entering into covered transactions. Condition and Context: We noted 3 new procurements in the current fiscal year, all of which were selected for testing, totaling $145,418 for student devices and curriculum materials. Based on discussions with personnel of the Organization it is our understanding these procurements occurred during the pandemic and were either done out of immediate need or procured from an exclusive vendor. We noted the entity lacked sufficient documentation to support the rationale of the procurement method, selection of contract type, contractor selection or rejection, and basis for the contract price. We also noted suspension and debarments requirements were not given consideration prior to entering into these transactions. However, we noted there were adequate invoices to support the purchases. Cause and Effect: As described in item 2021-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Additionally, certain individuals within a department responsible for the use of federal lacked knowledge of the compliance requirements pertaining to the use of the funds. As a result, the did not comply with requirement for proper procurement or in relation to suspension and debarment. Recommendation: We recommend the Organization develop a system of internal controls aligned with the applicable compliance requirements to sufficiently document procurements and to ensure suspension and debarment is considered prior to entering into future covered transactions. Views of Responsible Officials and Planned Corrective Actions: While the Organization believes procurement requirements are followed, management concurs that the documentation of procurement activities does not always occur. The additional position described above in 2021-001 will oversee procurement of purchases with federal funds and will be responsible for ensuring all compliance requirements are followed and appropriately documented.

U.S. Department of Education and U.S. Department of Agriculture 2020-001 Title I Grants to Local Educational Agencies ? CFDA #84.010 Child Nutrition Cluster ? CFDA #10.553, 10.555 & 10.559 Material Weakness in Internal Control over Compliance ? Risk Assessment Process Related to Compliance Requirements Criteria: 2 CFR 200.303 includes requirements related to internal controls for federal award programs, including that the Organization must, among other things, ?establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)?. Condition and Context: The Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. Cause and Effect: The material weakness resulted in the noncompliance findings described below in items 2020- 002, 2020-003, 2020-004, and 2020-005. Recommendation: We recommend additional resources be allocated to federal award compliance to review federal award provisions and requirements, evaluate risks of noncompliance, and respond to such risks through internal controls. The process should include methods to identify and communicate changes to federal award requirements and verify internal controls are implemented correctly and are operating effectively. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. As the Organization has grown, compliance of federal programs has become decentralized. The Organization is evaluating adding a Director of Compliance & Reporting to its full-time staff. Until that time, the Business Office of the Organization will assume the role of ensuring all appropriate staff members are aware of compliance requirements as they relate to federal funding. The Organization will work with our third party partners, such as the Indiana Department of Education, to ensure management has the knowledge of all compliance requirements and will work to create an internal monitoring process.

U.S. Department of Education 2020-002 Title I Grants to Local Educational Agencies ? CFDA #84.010 Noncompliance ? Special Tests and Provisions Annual Report Card, High School Graduation Rate Criteria: The Elementary and Secondary Education Act of 1965 (ESEA) section 1111(h)(1)(C)(iii)(II) and 8101(23), (25) (20 USC 6311(h)(1)(C)(iii)(II) and 7801(23), (25)) requires that to remove a student from the cohort, the Organization must confirm, in writing, that the student transferred out, emigrated to another country, transferred to a prison or juvenile facility, or is deceased. Furthermore, the Indiana Department of Education (IDOE) ?Documentation Needed for Mobile Students? requires the specific documentation to support students removed from a cohort, which varies based on the specific reason for the removal. Condition and Context: We selected 50 student withdrawals for testing. Our sample was not a statistically valid sample. Of the items selected the following issues were noted: (a) The Organization maintained writing documentation confirming every student?s removal from the cohort; however, 42 of 50 withdrawal requests had documentation which did not meet the IDOE requirements referenced above. (b) 5 of 50 withdrawals were improperly coded and reported based on withdrawal requests examined. Cause and Effect: As described in item 2020-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. As a result, the Organization was not aware of the specific documentation requirements established by the IDOE and did not have internal controls established to identify routine errors made during the completion of written forms. This could lead to inadequately documented or inaccurate student withdrawals resulting in potential improper cohort reporting for High School Graduation Rate calculations. Recommendation: We recommend the policies in accordance with the IDOE ?Documentation Needed for Mobile Students? be written by the Organization, approved by the Board of Directors and included in the permanent files of the Organization. Additionally, we recommend the Organization implement a review process of the withdrawal forms entered to ensure accurate entry of data occurs. Finally, we recommend that the Organization establish a process to identify requirements specified by the IDOE in addition to the federal requirements. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. The Organization?s enrollment department will review and make revisions to the withdrawal procedure to ensure that all required documentation is obtained. Staff members will be required to clearly and thoroughly document all attempts to obtain documentation. A thorough, written procedure will be finalized and reviewed annually to ensure all state and federal compliance requirements are being met. Further, the Chief Enrollment Officer will implement a monitoring process to ensure the policy is being adhered to by school personnel.

U.S. Department of Agriculture 2020-003 Child Nutrition Cluster ? CFDA #10.553, 10.555 & 10.559 Noncompliance ? Eligibility Criteria: 7 CFR 245.2 sets the maximum price allowed to be charged for a free price breakfast at $0.30. Condition and Context: We selected 40 students for testing eligibility. Our sample was not a statistically valid sample. Of the items selected we noted one student who was charged $0.40 which is above the maximum allowable prices as noted in the criteria referenced above. The error as due to improper configuration of the computer application used to administer the Child Nutrition Cluster and applied to all reduced-price breakfasts served during the fiscal year 2020. The total reduced-price breakfast served during fiscal year 2020 were 1,474 and the total amount overcharged to students was $147.40. Questioned Costs: $147.40 Cause and Effect: As described in item 2020-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. As a result, the Organization?s computer application was improperly configured resulting in overcharging reduced-price breakfast students for each breakfast served during the fiscal year 2020. Recommendation: We recommend the Organization properly configure the computer application to set the price of reduced-price breakfast to $0.30 and monitor any changes made to the maximum prices allowed for meals to ensure continuing compliance. Additionally, we recommend the Organization implement a review process of the configuration of the application to ensure the application is configured to prevent and detect noncompliance. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. Meals Plus was implemented during fiscal year 2020 to administer all activities involved with the Child Nutrition Cluster. An error in the initial configuration occurred causing the finding noted above. The Organization has since corrected the configuration error. Management will implement a process to ensure the prices included in the configuration are accurate at the beginning of each school year.

U.S. Department of Agriculture 2020-004 Child Nutrition Cluster ? CFDA #10.553, 10.555 & 10.559 Noncompliance ? Eligibility Criteria: 7 CFR section 245.6(b) define the allowable reasons for direct certification of households. The allowable reasons do not include households or children who receive Medicaid benefits. Condition and Context: We selected 40 student for testing eligibility. Our sample was not a statistically valid sample. Of the items selected the following issues were noted that 7 of 40 students selected were improperly direct-certified based on Medicaid case numbers provided in the household application. Cause and Effect: As described in item 2020-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. As a result, the Organization?s computer application was improperly configured to allow households to submit applications for direct-certification using Medicaid case numbers. When this occurred those students were also improperly designated as free-price students. These findings resulted in the IDOE taking fiscal action totaling $2,632.67 to be deducted against future claims for reimbursement based on improperly served lunches. Questioned Costs: $2,632.67 Recommendation: We recommend the Organization properly configure the computer application to allow only allowable direct-certifications and to properly categorize students based on IDOE provided Medicaid data. Additionally, we recommend the Organization implement a review process of the configuration of the application to ensure the application is configured to prevent and detect noncompliance and evaluate changes in compliance requirements to identify any necessary changes to the configuration of the application in the future. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. Meals Plus was implemented during fiscal year 2020 to administer all activities involved with the Child Nutrition Cluster. This error was the result of configurations when the system was implemented and was uncovered by the Indiana Department of Education during a monitoring visit in late 2019. Restrictions have been added to the system in that users are unable to select an ?Other? category for direct certification. In addition, the Organization requested that the case number be restricted to just 10 digits to eliminate the submission of ineligible case numbers. These corrections eliminated the error in eligibility determination of free based on direct certification for families that received Medicaid. To receive free lunch, these families now need to submit income information for eligibility determination.

U.S. Department of Agriculture 2020-005 Child Nutrition Cluster ? CFDA #10.553, 10.555 & 10.559 Noncompliance ? Special Tests and Provisions Verification of Free and Reduced Price Applications Criteria: 7 CFR section 245.11(c)(1) requires local educational agencies to complete the second review of applications in a timely manner. 7 CFR section 245.11(c)(3) requires reporting of the second review be submitted to the State agency by a date they establish. Condition and Context: We reviewed the second review of applications completed by the Organization noting the following issues: (a) The second review of applications was not completed timely (during the initial approval process). (b) The required Local Educational Agency Second Review of Applications Report (FNS-742a) was not submitted. (c) The benefits changes required from the second review process did not give households adequate advance notice (10 calendar days) Cause and Effect: As described in item 2020-001, the Organization has not established a formal process related to federal awards to identify all key compliance requirements and changes in compliance requirements, evaluate risks of noncompliance with these requirements, and respond to such risks of noncompliance through establishing or changing processes and internal controls. As a result, the Organization did not complete the second review of applications appropriately. This resulted in noncompliance with this special provision and could result in improperly serving meals to students based on incorrect eligibility determinations. The completion of the second review of application may have been beneficial in detecting the issues noted in finding 2020-004. Recommendation: We recommend the second review of applications be completed as required and that the Organization establish internal controls to ensure the second review is completed timely, the FNS-742a report is submitted, and that changes were made to eligibility status, as necessary, based on the second review. Views of Responsible Officials and Planned Corrective Actions: The Organization is in agreement with this finding. Meals Plus was implemented during fiscal year 2020 to administer all activities involved with the Child Nutrition Cluster. As the system was implemented there were delays that occurred in the initial review and second review of applications. Further, the second review was documented and submitted to the Indiana Department of Education for assistance as some of the configuration errors mentioned in this report were uncovered during this process. Much of the issues uncovered during the second review were addressed in the Indiana Department of Education site visit shortly after the documentation was submitted. The process was streamlined for the 2020-2021 school year.